GFL Environmental initiated with an Outperform at Wolfe Research

Wolfe Research initiated coverage of GFL Environmental with an Outperform rating and $36 price target as part of a broader research note on Environmental Services. The sector has clear historical outperformance during downturn and offers attractive barriers to entry and pricing power, with smaller players able to grow via M&A, the analyst tells investors in a research note, adding that the firm sees resilient pricing power and incremental upside from recycling, automation, and cost cutting. The company is also the most levered name in the firm’s coverage, still working down debt accumulated during several years of aggressive M&A, though it believes that the stock can work on deleveraging as strong free cash flow reducing borrowing costs “can move the needle”, Wolfe added.